NEW DELHI: CREDAI, the apex realtors' body, today sought tax incentives in Budget for low-cost housing and cheaper funds to developers in order to boost supply and check rising property prices.

In its budget wish-list, CREDAI President Lalit Kumar Jain demanded that tax exemption for small houses of under-60 square metre of carpet area should be provided in budget.

He also suggested creation of special housing zones with tax exemptions, on the lines of SEZ, for constructing 45 square meter houses for low income groups and 30 square meter houses for the economically weaker sections.

Considering that the country's housing shortage is very high at 18.1 million houses, Jain said: "It is high time that the government took a pragmatic and practical look at the real estate sector today and take steps that help the industry in particular and the economy in general".

He regretted that over the last nine months credit to commercial real estate has gone down by more than 13 per cent and priority lending to housing sector by 1.29 per cent.

Jain argued that the present risk weight of 1.25 per cent given by the RBI has resulted in choking of bank finance to real estate and thus affecting the availability of housing stock and the prevailing market-driven high prices.

"CREDAI, therefore, suggested scrapping of the RBI risk weightage and called for banking reforms and facilitate easy and low-cost funding for housing to encourage developers increase the supply and bring down prices," the association said in a statement.

The developer's body also demanded that housing should be accorded industry status. "Affordable housing be treated as priority sector and the rates of interest for housing loans should be brought down to an acceptable 7.5 per cent".

Seeking relaxations in projects that can become eligible for FDI, the association said the external commercial borrowing (ECB) should be permitted as per the FDI norms and be allowed for housing financial institutions and even for all affordable housing and rental housing projects.

CREDAI also suggested a special focus on rental housing to serve the needs of a huge section of the population that may not be in a position to immediately buy houses.

It said the real estate contributes as much as 5.5 per cent to the country's GDP and if construction industry is included, the share goes up to 11 per cent. "Even in China, which is more known as manufacturing hub, the contribution of real estate to its GDP is as high as 30 per cent," it added.

"We see no reason as to why real estate cannot become the new growth engine for the Indian economy," Jain said.